FAQ

Frequently asked questions

Short answers, grouped by topic.

Choosing a structure

Do I need to register anything to be a sole proprietor in Illinois?: There is no state formation filing for a sole proprietorship, so the state cost is $0. If you use a business name other than your own legal name, you file an assumed name (DBA) with your county.
What is the main difference between a sole proprietorship and a single-member LLC?: Liability. A sole proprietor is personally liable for business debts and claims; an LLC separates business liability from your personal assets when you keep the business properly separate.
Is a single-member LLC taxed differently from a sole proprietorship?: Not by default. A single-member LLC is a disregarded entity, so you report profit on Schedule C and pay self-employment tax just like a sole proprietor.
When does an S-corp election make sense?: The conversation usually starts when net profit is steadily around $40,000-$80,000 or more. That is a rule of thumb, not a threshold; a CPA should run your numbers.
What is a series LLC?: One LLC with separated series inside it. It costs $400 to file in Illinois and is mostly used by people with multiple properties or business lines.

How much does it cost to form an LLC in Illinois?: Filing Articles of Organization (Form LLC-5.5) costs $150, online or by mail. Expedited review is $100 extra.
How long does approval take?: Standard processing is about 10 business days. Expedited review takes about 24 hours.
Can I be my own registered agent?: Yes. The registered agent needs an Illinois street address, and you may serve as your own.
Do I need an operating agreement for a one-person LLC?: It is not filed with the state, but banks often ask for one and it supports the separation between you and the LLC. A short single-member agreement is enough.
Should I form my LLC in Wyoming or Delaware to save money?: Usually not. An Illinois resident doing business here must also register the LLC in Illinois as a foreign LLC for $150, so you pay both states.

How much is the Illinois LLC annual report?: $75 per year.
When is the annual report due?: Before the first day of your LLC's anniversary month. You can file during the 60-day window before that date.
What happens if I miss it?: A penalty applies that cannot be waived, and continued non-filing can lead to administrative dissolution of the LLC.

How do I check whether an LLC name is available?: Search for free in the Illinois Secretary of State business entity search. The name must include "LLC" or "limited liability company".
Can I reserve a name before filing?: Yes, a name reservation costs $25 and holds the name for 90 days.
What does a county assumed name (DBA) cost?: Between $5 and $50, depending on the county. Counties also require a newspaper publication step after filing, which people often skip.

Do I need a license to run a business from home in Chicago?: Chicago's home occupation license costs $250 for 2 years. Other cities have their own home-occupation rules, so check with your city.
Does the state issue one general business license?: This guide doesn't cover a single statewide license. Requirements depend on your city, county, and line of work, so check locally.

What is self-employment tax?: A 15.3% tax on net self-employment earnings that covers Social Security and Medicare. Sole proprietors and default single-member LLCs pay it.
What is the Illinois income tax rate?: 4.95% for individuals.
Do I need to pay quarterly estimated taxes?: Usually yes once you have self-employment profit, since no employer is withholding for you. Missing them is one of the most common mistakes.
Are services taxable in Illinois?: Services are often not taxed, but materials transferred to a customer as part of a service job can be. Ask a tax professional about your specific work.
What is the Personal Property Replacement Tax?: An Illinois tax that applies to S corporations at 1.5% of net income. Factor it in when comparing an S-corp election.

Do I need a separate business bank account?: For an LLC, yes in practice: keeping funds separate supports the liability protection. Sole proprietors benefit from one too, for cleaner records.
How do I get an EIN?: Apply free on the IRS website. Never pay a third party for an EIN.

Does an LLC replace business insurance?: No. An LLC separates business liability from personal assets; insurance pays covered claims. Many solo owners need both.
When is workers' comp required?: In Illinois, from your first employee.

Do I have to report new hires?: Yes, to the IDES new-hire registry within 20 days, and in Illinois that includes independent contractors.
Do freelancers need written contracts?: The Freelance Worker Protection Act expects a written contract for work worth $500 or more over 120 days.

Can this site file my LLC for me?: No. This is an informational guide, not a filing service. You can file directly with the Secretary of State.
How do I get help from a professional?: Use the request form. Your request may be shared with an independent local professional, such as an accountant, attorney, insurance agent, bookkeeper, or payroll provider.

General information, not legal or tax advice.